Now official: Globalfoundries goes public with high debts

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A rumor for months, but recently decided behind closed doors, it is now completely official: Globalfoundries’ IPO, i.e. going public. No price has yet been set for the share, but the IPO could be worth around 25 billion US dollars at the end.

In the end, the announcement by Globalfoundries (GF) is anything but a surprise. Because as early as August, the company secretly made the preparations. The document, which has now been officially published, still contains placeholder entries in many places, so that it remains with an estimate of the market value. At around 25 billion US dollars, it would be a little below the value that was thought in the spring, and 30 billion and more have already been discussed there.

Going public comes with many financial details that Globalfoundries has so far often owed the public. It was always difficult to estimate how much turnover and profit or loss the company had made recently, and negative headlines were almost completely eliminated. That is changing now.

Before Corona, GF went steadily downhill

In the first six months of 2021, Globalfoundries achieved sales of 3.038 billion US dollars, an increase of almost 13 percent over the previous year. The company was still making a loss, even though it was much smaller than in previous years, at just $ 301 million. The loss statement in particular has always been a great unknown in the past few years, today it is clear how much money Globalfoundries has burned in the past few years. The total for 2018, 2019 and 2020 is a net loss of 5.5 billion US dollars. The figures also show that sales have steadily declined, from 6.2 billion US dollars in 2018 to just 4.85 billion US dollars in 2020. The chip crisis, triggered by Corona and the COVID- 19 pandemic, with now high prices and companies desperately looking for capacity, is a real lifeline for Globalfoundries. GF states that they would now be the second strongest force in terms of sales per wafer after TSMC.

Sales per wafer in the first half of 2021 Sales per wafer in the first half of 2021 (Image: GF)

In many departments, however, the red pencil was applied, which becomes very clear in the area of ​​research and development. Here, spending in 2018 was 926 million US dollars, in 2019 it was only 583 million, only to drop to 478 million the following year. In the first half of 2021, spending in this area fell even further. The failed 7 nm development was handled here, among other things.

The bottom line is that the mountain of debt is a huge one, without the constant supply of money by Mubadala, which in turn is part of the Government of Abu Dhabi, GF would not have remained viable. In 2021, that mountain will still be over $ 10 billion.

Expand capacity, implement expansion plans

Nevertheless, Globalfoundries looks to the future with optimism. The IPO will bring fresh money into the till, expansion plans will be implemented directly with customers in Singapore and state participation in New York. This lays a solid foundation for the coming years, because GF has already secured purchases worth almost 20 billion US dollars for the coming years. Unused capacities should also be used, because, as GF explains, the plant in Dresden, for example, remains far below the possibilities. Here, too, the expansion plans are already being implemented.

GF Fabs worldwide GF Fabs worldwide (Image: GF)

The bottom line is that the timing could hardly be better for Globalfoundries, and the demand for chips is unlikely to weaken. The ailing foundry could ultimately find its way out of the crisis.

That holds for those interested almost 300 pages long document A few more interesting dates are available for the IPO announcement.

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